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What is a blockchain?

A blockchain is a digital, public ledger that records online transactions. Blockchain is the core technology for cryptocurrencies like bitcoin.

A blockchain ensures the integrity of a cryptocurrency by encrypting, validating, and permanently recording transactions.
A blockchain is similar to a bank’s ledger, but open and accessible to everyone who utilizes the cryptocurrency.

Deeper definition:

A blockchain is, in the simplest of terms, a time-stamped series of immutable records of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain).

The blockchain network has no central authority — it is the very definition of a democratized system. Since it is a shared and immutable ledger, the information in it is open for anyone and everyone to see. Hence, anything that is built on the blockchain is by its very nature transparent and everyone involved is accountable for their actions

As it’s name suggests, a blockchain is made up of a series of “ blocks.”

The blockchain software records each transaction in a block without the aid of a third party like a bank or payment processor. The blockchain algorithm automatically encrypts and authenticates the transaction, which is immediately visible to all users, minimizing the possibility of fraud. The terms of the transaction do not include any personal or identifying information.

Every blockchain user has the same copy of of the entire blockchain as everybody else. This makes it virtually impossible to manipulate: a hacker would have to harness computing power greater than that of every user to alter the blockchain in his favor. Because of this ironclad security, major mainstream institutions like Citigroup and the London Stock Exchange have embraced blockchain technology, in the hope of using it, for example, to protect intellectual property or store investment records.

How Does a Blockchain Work?

Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.

Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

How Blockchain Transaction Works?

Step 1) Some person requests a transaction. The transaction could be involved cryptocurrency, contracts, records or other information.

Step 2) The requested transaction is broadcasted to a P2P network with the help of nodes.

Step 3) The network of nodes validates the transaction and the user's status with the help of known algorithms.

Step 4) Once the transaction is complete the new block is then added to the existing blockchain. In such a way that is permanent and unalterable.

Why do we need Blockchain?

Here, are some reasons why Blockchain technology has become so popular.:-

Resilience: Blockchains is often replicated architecture. The chain is still operated by most nodes in the event of a massive attack against the system.

Time reduction: In the financial industry, blockchain can play a vital role by allowing the quicker settlement of trades as it does not need a lengthy process of verification, settlement, and clearance because a single version of agreed-upon data of the share ledger is available between all stack holders.

Reliability: Blockchain certifies and verifies the identities of the interested parties. This removes double records, reducing rates and accelerates transactions.

Fraud prevention: The concepts of shared information and consensus prevent possible losses due to fraud or embezzlement. In logistics-based industries, blockchain as a monitoring mechanism act to reduce costs.

Security: Attacking a traditional database is the bringing down of a specific target. With the help of Distributed Ledger Technology, each party holds a copy of the original chain, so the system remains operative, even the large number of other nodes fall.

Decentralized: There are standards rules on how every node exchanges the blockchain information. This method ensures that all transactions are validated, and all valid transactions are added one by one.

Blockchain Variants

Public:

In this type of blockchains, ledgers are visible to everyone on the internet. It allows anyone to verify and add a block of transactions to the blockchain. Public networks have incentives for people to join and free for use. Anyone can use a public blockchain network.

Private:

The private blockchain is within a single organization. It allows only specific people of the organization to verify and add transaction blocks. However, everyone on the internet is generally allowed to view.

Consortium:

In this Blockchain variant, only a group of organizations can verify and add transactions. Here, the ledger can be open or restricted to select groups. Consortium blockchain is used cross-organizations. It is only controlled by pre-authorized nodes.